Case Studies: California Pizza Kitchen

One of the successful food licensors is California Pizza Kitchen; they recently cited slow sales in what they called "unprecedented economic times" (unprecedented except for the Joads) and heavy impairment charges while posting a $5.3MM loss in its fourth quarter of 22 cents per share, compared with a profit of $3.5MM, or 12 cents a share, in the year-earlier quarter. Expansion will be limited this year to only 5 company-owned restaurants and 10 franchised units. Excluding the impact of more than $13 million of impairment charges and other one-time items, CPK said it would have earned $3.1 million, or 13 cents a share, in the fourth quarter. Fourth-quarter revenue dipped slightly to $161.8MM, down 0.7% from a year ago. Same-store sales fell 7.2% in the fourth quarter; for the entire year CPK reported net income of $8.7 million, or 34 cents a share, compared with profit of $14.8 million, or 50 cents a share, in the year before. Annual revenue rose nearly 7% $677.1MM. Same-store sales fell 2%. For the current fiscal year, CPK predicted same-store sales would fall between 5.5-6.5%.

But in one of the bright spots for the company, it will shortly debut its first non-pizza retail offering with a line of CPK-licensed "Flatbread Melts" sandwiches. Produced and marketed under license by Kraft, CPK's new offerings extend its "core" retail product line outwards to the fast-growing category of "enrobed meals" (sandwiches, Hot Pockets, etc.). As consumers look for alternatives that are tasty and easy-to-prepare, items that traditionally would qualify as snacks are taking their place as meal solutions. It's part of the trend towards "bringing the restaurant experience home" that has all the restaurant world talking about how they, too, can leverage their brands to retail.

That's market-speak for "how can I get a piece of that action?"

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